Joe Oliver and the national securities regulator: ‘This is not an easy country to govern’

Finance Minister Joe Oliver didn’t really need a briefing before his announcement Wednesday that two more provinces were joining Ottawa in its drive to create a national securities regulator.

“We’ve got momentum now,” Oliver said the morning after his news conference, where Saskatchewan and New Brunswick joined Ontario and British Columbia in Ottawa’s bid to create a national securities regulator in a country that now has 13 of them—one for each province and territory. The three other Atlantic provinces and the three northern territories are also expected to join the fold. Quebec and Alberta? That’s another story. Manitoba is yet to be heard from. The four provinces on side represent 53 per cent of market capitalization for publicly traded Canadian companies, and 75 per cent of listed companies.

Oliver has a deep understanding of financial markets, having spent his entire life before politics working in them and then running them.

He was an investment banker at Merrill Lynch and then Nesbitt Thomson, before becoming executive director of the Ontario Securities Commission and later CEO of the Investment Dealers’ Association.

The concept of a national securities regulator is not new to him. “When I was at the IDA we launched a national securities initiative,” he recalls, while admitting “it wasn’t very well received” by some of the provinces.

Oliver’s knowledge of financial markets made him the obvious choice for Finance when Jim Flaherty stepped down only weeks before his death three months ago. And in making the case for a national regulator, Oliver is carrying on where Flaherty left off.

“This is by nature national and international,” Oliver was saying. “Securities markets are overwhelmingly interprovincial and international.”

Canada represents about “two or three per cent,” of equity in global markets. You can imagine regulating PEI’s share of that.

But Oliver is also a lawyer, and the first thing he learned at McGill Law was the division of powers in the Constitution. Ottawa’s powers are in Section 91, the POGG, Peace, Order and Good Government. The powers of the provinces are in section 92.

The feds have argued for years that securities regulation should fall under the trade and commerce clause in section 91(2) of the Constitution Act.

The provinces have always maintained that securities regulation falls under property and civil rights in section 92 (13).

And in response to a federal reference in December 2011, the Supreme Court of Canada agreed with the provinces. Unanimously, 9-0.

The Supremes wrote that while the nature of markets “may support federal intervention that is qualitatively different from what the provinces can do, they do not justify the wholesale regulation of the securities industry.”

So there. When interpreting the Constitution, the court invariably rules on the original intent of the Fathers of Confederation. Who knows what Sir John A. Macdonald and the founding fathers were thinking, or drinking, when they agreed on the division of powers? But securities regulation has always been a provincial matter.

“I don’t know what they were thinking,” Oliver says.

As for Quebec, what else would you expect from any government, than Finance Minister Carlos Leitano expressing disappointment that “the federal government continues to press ahead with a solution to a problem that does not exist,” or Intergovernmental Affairs Minister Jean-Marc Fournier dismissively saying Ottawa’s move “doesn’t hold water from the point of view of economics, law or evidence”?

Oliver takes this for what it is—rhetoric.

“This is not a sovereignist Quebec government,” he says, “but it is a nationalist government, as every single Quebec government is when it comes to defending their interests.”

He is clearly more interested in having a conversation than an argument, with both Quebec and Alberta.

For example, what would prevent Quebec from maintaining its own securities commission, while joining the national regulator? People have been known to wear both belts and suspenders.

On Alberta, Oliver clearly understands the sensitivity of how Albertans “don’t want to be crushed” by decisions “that are made in Toronto.”

He pointedly adds: “There has to be sensitivity to the needs and capacities of smaller companies.”

If Alberta were eventually to join a national securities regulator, Oliver sees “Calgary as a centre of excellence for the oil and gas industry. Alberta would play a pre-eminent role in policy related to its industry.”

Clearly, Oliver wants a dialogue, rather than a fight, with the dissenting provinces. He obviously understands where they are coming from, and his choice of words is conciliatory rather than confrontational.

And while he has nothing to learn about the securities industry, he continues, at 74, to learn about Canada.

“You know,” he said, “this is not an easy country to govern.”

—L. Ian MacDonald is editor of Policy, the bi-monthly magazine of Canadian politics and public policy. He is the author of five books. He served as chief speechwriter to Prime Minister Brian Mulroney from 1985-88, and later as head of the public affairs division of the Canadian Embassy in Washington from 1992-94.

The views, opinions and positions expressed by all iPolitics columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of iPolitics.

2 comments on “Joe Oliver and the national securities regulator: ‘This is not an easy country to govern’”

The author states that Joe Oliver was the obvious choice for Finance Minister and at the same time quotes him as saying Canada is a hard country to govern. Joe Oliver is an obvious choice for Finance Minister ONLY for a government with an extreme corporate bias and absolutely no regard for the livelihood of average Canadians. It’s understandable that he finds it hard to govern Canada, since Canadians are reluctant to take guidance from the folks that brought us the last great depression and from a leader that characterizes those who oppose his energy based development plans as radicals and terrorists. Canada is NOT hard to govern. Canadians are about the most cooperative people on earth and Canada runs very well when there isn’t a radical government trying to impose an ideological framework that is completely at odds with the Canadian character.

It is sad to see two provinces caving in to the pressures of the investment crowd.
Not that a national regulator doesn’t make any sense at all; but alas it only makes sense in the abstract, i.e. the conceptual.

In practice the “national regulator” so fervently desired by Bay Street represents nothing other than promoting the Ontario Security Commission to that function, thereby eliminating other bodies that retain some awareness of its actions and the legal expertize to evaluate its deeds and misdeeds.

The OSC and its unholy twin IIROC are toy poodles of Bay Street. Their interests are not those of the Canadian economy (forget the small investor) but the profitability of the “Bay Street” gang. For the author to claim that a former head of the IDA, the most distrusted industry lobby in the country, was a logical choice for minister of finance beggars the question of sycophancy.

Sad! As a small Ontario investor/saver I will have to keep hoping for steadfastness of the Quebec and Alberta provincial interests.